China is now facing pressure as many leading countries have sidelined to block chip exports to it. This may deliver a severe blow to the economy as the country is still unable to ensure a steady economic recovery. Besides, China’s economy is dependent on foreign investments and trade.
At first, the US launched sweeping rules aimed at cutting off exports of chips and semiconductor tools to China. However, not long ago, the EU did likewise. Notably, Western companies have been taking advantage of cheap labor and lower prices for a long time, cooperating with Chinese chip manufacturing enterprises. Things went well so that China had almost become the largest electronics manufacturer. It means that it could set conditions. For this reason, the EU introduced the Chips Act. "The Chips Act will boost the European ecosystem for semiconductors and play a vital part in strengthening the EU's competitiveness at the global level," the bloc's Swedish presidency announced. The EU plans to double its current global market share to 20% in 2030 and mobilize more than €43 billion in public and private investments to meet Europe's growing appetite for chips. The deal included €3.3 billion allocated to "support large-scale technological capacity building and innovation across the EU in the semiconductor sector," German MEP Henrike Hahn tweeted.
The Act will help establish technological sovereignty. In this confrontation, China has only one advantage - rich inventories of rare earth metals necessary for the production of chips. However, natural resources are not enough. The country also needs technology and Beijing has problems with this.
In June, the Netherlands imposed new export restrictions on semiconductor technologies. As a result, China lost key equipment for chip production. The authorities said that the rules apply to a number of very specific technologies for the development and production of advanced semiconductors that could potentially have military applications.
